I make a ton of currency swaps in my line of work. It goes with the territory. But lately it’s been a harrowing experience. Many currencies around the world have been a mess for the last few months. The value of the British pound, for example, has dropped 13% against the dollar since July 2014. #-ad_banner-#At the same time, the Canadian dollar has plummeted 15% against its American counterpart. And the Colombian peso — another currency I’m frequently buying — is down an astounding 28% over the same period. I’ll admit… Read More

I make a ton of currency swaps in my line of work. It goes with the territory. But lately it’s been a harrowing experience. Many currencies around the world have been a mess for the last few months. The value of the British pound, for example, has dropped 13% against the dollar since July 2014. #-ad_banner-#At the same time, the Canadian dollar has plummeted 15% against its American counterpart. And the Colombian peso — another currency I’m frequently buying — is down an astounding 28% over the same period. I’ll admit it’s been quite a hassle lately. I almost ran out of pesos in the Colombian countryside recently because of it. But what has me really worried is how these “currency wars” are starting to effect businesses and stocks valuations around the world. Let me show you what I mean. A few months ago, in my premium advisory Top 10 Stocks, I discussed how the massive and often-unprecedented fluctuations in currency rates have been crushing profits and lowering the valuations of many of the world’s most well-known and established companies. I showed how over the… Read More

Wall Street tends to take a binary view of even well-seasoned companies: Love ’em or hate ’em. Right now, the Street is overreacting to some snags at one of the world’s leading financial services firms, American Express Co. (NYSE: AXP).  In 2015, American Express is the Dow Jones Industrial Average’s worst performer, falling more than 16%.    Shares have weakened due to the company’s susceptibility to the strong dollar. Like other large multinationals, AXP generates substantial profits in foreign currencies. With the greenback at an 11-year high, those profits lose significant value when exchanged back to dollars. The market reacted… Read More

Wall Street tends to take a binary view of even well-seasoned companies: Love ’em or hate ’em. Right now, the Street is overreacting to some snags at one of the world’s leading financial services firms, American Express Co. (NYSE: AXP).  In 2015, American Express is the Dow Jones Industrial Average’s worst performer, falling more than 16%.    Shares have weakened due to the company’s susceptibility to the strong dollar. Like other large multinationals, AXP generates substantial profits in foreign currencies. With the greenback at an 11-year high, those profits lose significant value when exchanged back to dollars. The market reacted very harshly to an announcement in February regarding the loss of an exclusive 16-year co-branding agreement with Costco Wholesale Corp. (Nasdaq: COST), a relationship that accounts for 10% of all American Express cards in use.  American Express decided to walk away from the agreement, which ends next April, because the two companies couldn’t negotiate a mutually satisfactory fee arrangement. Costco plans to replace AXP with Citigroup, Inc. (NYSE: C) and Visa, Inc. (NYSE: V). The recent loss of a similar, though much smaller, relationship with budget airliner JetBlue Airways Corp. (Nasdaq: JBLU) hasn’t helped investor sentiment either. Adding insult, American… Read More

If you are reading this article, then you are likely considered a “self-directed investor.” You like to perform your own investment research and make buy, sell and short decisions on your own. But you should still know about the radical battle being raged for the hearts and minds of investors that entrust wealth building to others. #-ad_banner-#In one corner, we have traditional financial services firms such as The Charles Schwab Corp. (NYSE: SCHW), Vanguard and Fidelity Investments. In the other corner, you’ll find industry upstarts with names like Wealthfront, FutureAdvisor, Motif Investing and Betterment. These firms are all scrambling to… Read More

If you are reading this article, then you are likely considered a “self-directed investor.” You like to perform your own investment research and make buy, sell and short decisions on your own. But you should still know about the radical battle being raged for the hearts and minds of investors that entrust wealth building to others. #-ad_banner-#In one corner, we have traditional financial services firms such as The Charles Schwab Corp. (NYSE: SCHW), Vanguard and Fidelity Investments. In the other corner, you’ll find industry upstarts with names like Wealthfront, FutureAdvisor, Motif Investing and Betterment. These firms are all scrambling to establish a position in the field of robo-advising, also known as “automated investment services.” Before weighing in on which firm has built the best mousetrap and if the entire concept holds real appeal, it helps to understand what robo-advisers are and are not. Robo-advisers ask clients to fill out a quick survey that identifies an investor’s goals. They then create ideal low-cost portfolios that hold a basket of diversified exchange-traded funds. Total fees often end up at less than 1% of assets under management, compared to fees of 1%-to-2% of assets under management offered by traditional financial advisors. (Robo-adviser upfront… Read More

Four years after it topped at $1,900 per ounce, gold has been languishing in a range closer to $1,200. With interest rates low and most measures registering no inflation, gold seemed to be a dead asset. Its role as a hedge was dismissed by almost everyone except for the gold sellers on TV. Sentiment naturally turned very bearish, and that is when contrarian ears perk up. #-ad_banner-# Monday and Tuesday were unusually bullish days for… Read More

Four years after it topped at $1,900 per ounce, gold has been languishing in a range closer to $1,200. With interest rates low and most measures registering no inflation, gold seemed to be a dead asset. Its role as a hedge was dismissed by almost everyone except for the gold sellers on TV. Sentiment naturally turned very bearish, and that is when contrarian ears perk up. #-ad_banner-# Monday and Tuesday were unusually bullish days for the metal. However, the patterns on gold charts remain choppy-but-flat trading ranges. When viewed with a long-term eye, the trend is officially still to the downside.  That is why it seems people have gotten blindsided by recent strength in select gold mining stocks, especially since it is not sector-wide. Only the largest by market capitalization are racking up big gains, far outstripping the performance of popular gold mining indices and exchange-traded funds.  My favorite right now is Barrick Gold (NYSE: ABX). This Toronto-based, international miner looks ready to break out from a double-bottom pattern that has been… Read More

All major U.S. indices closed higher last week following a loss the week earlier, as the market continued what has thus far been a choppy but relatively flat 2015. One exception has been the tech-heavy Nasdaq 100, which led last week, closing 4.3% higher, and is now up 7.1% for the year.  As I have been stating here for some time, the market is vulnerable to an overdue summer correction as the Federal Reserve gets closer to an inevitable interest rate hike. However, as long as perennial market leaders like the Nasdaq 100 and small-cap Russell… Read More

All major U.S. indices closed higher last week following a loss the week earlier, as the market continued what has thus far been a choppy but relatively flat 2015. One exception has been the tech-heavy Nasdaq 100, which led last week, closing 4.3% higher, and is now up 7.1% for the year.  As I have been stating here for some time, the market is vulnerable to an overdue summer correction as the Federal Reserve gets closer to an inevitable interest rate hike. However, as long as perennial market leaders like the Nasdaq 100 and small-cap Russell 2000 continue to outperform the broader market, this year’s modest overall advance can continue in the near term. #-ad_banner-# All sectors of the S&P 500 finished in positive territory last week, led by technology and consumer discretionary.  Although energy was the weakest sector, my own ETF-based metric shows it had the biggest inflow of sector bet-related investor assets over the past one-month and three-month periods. This suggests the likelihood of more outright strength and… Read More

What kind of companies can you count on to generate value, even when the rest of the market is in a slump? If history is any guide, then one class of stocks consistently enjoys solid demand from consumers. In fact, this sector is considered by many to be full of great “rainy day stocks.” The sector in question: consumer non-discretionaries, otherwise known as consumer staples. Here’s just one example of their resilience. Between January 1, 2007 and January 1, 2010, the S&P 500 plummeted, returning negative 21% over that period. In contrast, one of these stocks — which I’ll describe shortly… Read More

What kind of companies can you count on to generate value, even when the rest of the market is in a slump? If history is any guide, then one class of stocks consistently enjoys solid demand from consumers. In fact, this sector is considered by many to be full of great “rainy day stocks.” The sector in question: consumer non-discretionaries, otherwise known as consumer staples. Here’s just one example of their resilience. Between January 1, 2007 and January 1, 2010, the S&P 500 plummeted, returning negative 21% over that period. In contrast, one of these stocks — which I’ll describe shortly — went up 51%. In other words, if you owned it during the recession, then this stock would have earned you money. Not many companies can make that claim. Because of the products they sell — basic foodstuffs and household essentials like toothpaste and soap — these companies resist the cyclical swings of the market at large. Unlike their luxury counterparts, people can’t give up buying their products, even when the economy goes downhill. Cars and travel are the perfect counterexamples: people spend more on them during bull markets, but cut back when income gets tight. So in the case… Read More

We often write about a group of stocks known as the “Dividend Aristocrats.” These stocks have a long track record of dividend payment increases, which make them among the most reliable income-producing investments you can find. But these stocks have one clear drawback: they are so loved by so many investors that their share prices often get pushed up to levels that translate into a mediocre dividend yield. Among the more than 50 stocks that qualify for Dividend Aristocrat status, only three of them — AT&T, Inc. (NYSE: T), HCP, Inc. (NYSE: HCP) and Consolidated Edison, Inc. (NYSE: ED) —… Read More

We often write about a group of stocks known as the “Dividend Aristocrats.” These stocks have a long track record of dividend payment increases, which make them among the most reliable income-producing investments you can find. But these stocks have one clear drawback: they are so loved by so many investors that their share prices often get pushed up to levels that translate into a mediocre dividend yield. Among the more than 50 stocks that qualify for Dividend Aristocrat status, only three of them — AT&T, Inc. (NYSE: T), HCP, Inc. (NYSE: HCP) and Consolidated Edison, Inc. (NYSE: ED) — have dividend yields above 4%. The 30-day SEC Yield on the ProShares S&P 500 Dividend Aristocrat ETF (NYSE: NOBL) is just 1.96%. Yet there is another group of stocks that have no shot at ever joining the Dividend Aristocrats. They are simply ignored by any investor that craves dividend stability. These companies, by the very nature of their business models, are simply in no position to guarantee that dividends will remain constant and growing. In fact, from time to time, these companies decide not to pay a dividend at all. Let me use Northern Tier Energy LP (NYSE: NTI) as… Read More

All major U.S. indices declined last week. This followed a strong showing the week before, as the market continued its year-long trend of lurching back and forth while remaining essentially unchanged.   Last week’s decline was led by the Nasdaq 100, which could prove problematic this week because of the market-leading index’s position just above a key support level that I have been discussing here for some time. Another potential problem is the economically sensitive Dow Jones Transportation Average, which as I mentioned in last week’s report, continues to negotiate… Read More

All major U.S. indices declined last week. This followed a strong showing the week before, as the market continued its year-long trend of lurching back and forth while remaining essentially unchanged.   Last week’s decline was led by the Nasdaq 100, which could prove problematic this week because of the market-leading index’s position just above a key support level that I have been discussing here for some time. Another potential problem is the economically sensitive Dow Jones Transportation Average, which as I mentioned in last week’s report, continues to negotiate major support at its 200-day moving average, now at 8,689, and may be failing there. #-ad_banner-# While industrials and consumer discretionary led the broader market lower last week, energy was the only sector of the S&P 500 to finish in positive territory, gaining 2.2%. In the previous report, I said that energy “continues to look like an emerging investment opportunity over the next one to two quarters.” Last week’s strong showing within an otherwise weak market suggests the move… Read More

Although ‘wide moat’ isn’t a term often applied to small cap investments, this unusual combination does exist. Take US Ecology, Inc. (Nasdaq: ECOL), a relatively small waste-management firm that handles hazardous, non-hazardous and radioactive waste. With only about $1 billion in market value and sales of $447 million last year, US Ecology is dwarfed by industry giant Waste Management, Inc. (NYSE: WM). That firm is worth nearly $25 billion and boasts annual revenue of $14 billion. Yet US Ecology displays consistency more often associated with much larger companies. Indeed, revenue and net income grew every year during the past decade… Read More

Although ‘wide moat’ isn’t a term often applied to small cap investments, this unusual combination does exist. Take US Ecology, Inc. (Nasdaq: ECOL), a relatively small waste-management firm that handles hazardous, non-hazardous and radioactive waste. With only about $1 billion in market value and sales of $447 million last year, US Ecology is dwarfed by industry giant Waste Management, Inc. (NYSE: WM). That firm is worth nearly $25 billion and boasts annual revenue of $14 billion. Yet US Ecology displays consistency more often associated with much larger companies. Indeed, revenue and net income grew every year during the past decade (except 2009 and 2010 when the economy was in bad shape). Plus, this year will be the firm’s eleventh straight with a dividend. Free cash flow, now $43 million annually, is at an all-time high, which bodes well for dividend growth. And despite large acquisition costs last year, US Ecology is in solid financial shape, with debt levels not much greater than the industry average. Such results would be impossible to achieve without a formidable moat, a term coined by investing legend Warren Buffett to describe hard-to-penetrate economic defenses typically surrounding the strongest companies. US Ecology boasts several. Recurring Revenue… Read More

Over the past five years, the United States economy has been on the mend. So why is there still a pervasive sense that we’re stuck in the mud? Perhaps it’s because our economy has expanded at a 2.2%-to-2.4% rate in each of the past three years. That seems downright anemic compared to economic growth rates seen in prior decades. Yet every spring, economists sing the same refrain: “This is the year we’ll finally reach 3% GDP growth, and the economic recovery will finally feel real.” This year began with a similar refrain. According to a Wall… Read More

Over the past five years, the United States economy has been on the mend. So why is there still a pervasive sense that we’re stuck in the mud? Perhaps it’s because our economy has expanded at a 2.2%-to-2.4% rate in each of the past three years. That seems downright anemic compared to economic growth rates seen in prior decades. Yet every spring, economists sing the same refrain: “This is the year we’ll finally reach 3% GDP growth, and the economic recovery will finally feel real.” This year began with a similar refrain. According to a Wall Street Journal survey conducted in January, economists looked into their crystal balls and once again predicted a 3% economic growth rate this year. (That article suggested that the economy grew 2.6% last year, but that figure has been subsequently ratcheted down to 2.4%.) “The plunge in energy prices provides big dividends to consumers and businesses,” said Bernard Baumohl, chief global economist of the Economic Outlook Group to the WSJ at the time. Here’s the problem: any sort of oil-related dividend is nowhere to be found. Consider this recent sampling of economic data points: — Revolving credit (which mostly reflects credit… Read More